[Congressional Record Volume 141, Number 163 (Friday, October 20, 1995)]
[Extensions of Remarks]
[Page E1994]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               ANTICOUNTERFEITING CONSUMER PROTECTION ACT

                                 ______


                           HON. BOB GOODLATTE

                              of virginia

                    in the house of representatives

                       Thursday, October 19, 1995

  Mr. GOODLATTE. Mr. Speaker, I am pleased to be joined by my 
colleagues, Representatives Hyde, Conyers, Moorhead, McCollum, Frank, 
Gekas, Smith of Texas, Coble, Canady, Bono, Heineman, Flanagan, and 
Davis in introducing the Anticounterfeiting Consumer Protection Act of 
1995. This legislation, which will provide much-needed additional 
protections against copyright and trademark counterfeiting, may be the 
most proconsumer, probusiness bill this Congress will consider. It 
directly addresses a practice that costs American business more than 
$200 billion a year, that results in the loss of an estimated 750,000 
jobs, and that threatens the health and safety of every American man, 
woman, and child.
  There is a myth that counterfeiting is just a penny ante crime, a $2 
watch or handbag. In fact, counterfeiting involves billions of dollars, 
gangs, highly sophisticated equipment, organized crime and terrorists.
  No area of the United States, no product is safe from the modern 
counterfeiter. We have seen counterfeits ranging from watches and 
sunglasses to auto and aircraft parts, from shampoo to baby formula, 
from food products to computer software. Counterfeit videotape copies 
of the movie, ``Waterworld,'' were available before the real movie was 
even released in theaters. The simple fact is that if it is a product 
sold in America, there is probably a counterfeit being made and sold 
somewhere around the world.
  The cost of counterfeiting is staggering. The U.S. Custom Service has 
estimated that in 1993, counterfeited goods resulted in the loss of 
750,000 jobs. Fake auto parts such as brake pads and oil filters cost 
our domestic auto industry losses of over $12 billion. If the sales of 
these fake parts alone were eliminated, the industry estimates that it 
could hire an additional 200,000 workers.
  The U.S. software industry has estimated that sales of pirated 
software account for more than 40 percent of total revenues. The 
counterfeiters have become so sophisticated in duplicating the label, 
the packaging, and even the hologram that appears on the software 
package, that it is almost impossible to distinguish authentic products 
from the fakes. In fact, the International Anticounterfeiting Coalition 
estimates that American businesses lose nearly $200 billion a year due 
to the sale of counterfeit products.
  Every day, the intellectual property of American businesses is being 
stolen. It often costs hundreds of thousands of dollars to ready a 
product for marketing, to make sure that it is not only effective but 
safe. But today, with powerful computers and copying equipment, it only 
costs counterfeiters a few dollars to manufacture a copy. They do not 
have to worry about safety or quality. They prey on the good name, the 
research, the talent and the hard work of others.
  Because of the lure of enormous profits compared to the relatively 
low risk of being arrested, prosecuted, and sent to jail, it has not 
taken long for organized crime to get involved in counterfeiting 
operations. For example, in three recent raids conducted in Los 
Angeles, counterfeit Microsoft software and other material with a 
potential RICO value in excess of over $10.5 million was seized. 
Implicated in this activity were three Chinese triads: the Wahching, 
the Big Circle Boys, and the Four Seas. The vast majority of the 
counterfeit product was produced in southern California. Sheriff 
deputies seized software, manuals, and holograms. They were surprised 
when they stumbled upon four pounds of plastic explosives, two pounds 
of TNT, shotguns, handguns, and silencers.
  Last month, U.S. Custom agents led massive raids in several States, 
including California, New York, New Jersey, and Georgia. They seized 
$27 million worth of counterfeit merchandise such as clothing, 
accessories, and sporting goods found in a network of factories, 
warehouses, and shops. Over 30 U.S. trademark holders were affected. 
Forty-three Korean nationals were charged for manufacturing, selling, 
and trafficking counterfeit merchandise. The scale of this operation 
demonstrates the pervasiveness and level of sophistication that is 
involved.
  Recently, $400,000 worth of counterfeit handbags were seized in New 
Jersey. During the raid, law enforcement officials using drug sniffing 
dogs discovered heroin had been stitched into the walls of a number of 
counterfeit designer Louis Vuitton handbags.
  Even more disturbing, however, is the growing threat counterfeits 
pose to public health and safety. For example, there have been reports 
of the seizure in 16 States of counterfeit Similac, an infant formula. 
Such a counterfeit could be deadly to any child who is allergic to the 
contents of the faked product. In a recent raid in Boston, a bogus 
butterscotch candy was seized that had been stored unwrapped and in 
unsanitary conditions. This candy was illegally labeled as a Bordon 
Eagle brand, however, that company does not even produce such a candy.
  Even the sale of fake watches it not a victimless crime. The head of 
the Born to Kill Gang based in New York City, was making an estimated 
$13 million a year selling fake Cartier and Rolex watches. This revenue 
stream financed other criminal activities, from extortion to murder.
  Despite these facts, the risk of arrest, prosecution and 
incarceration for counterfeiting is slight. Counterfeiting operations 
have become highly sophisticated, well-financed, mobile and 
international in scope. These criminal networks have distribution 
systems as diverse as any modern corporation. Counterfeiters know that 
although criminal penalties exist on the books, because of the 
inadequacy of the criminal penalties and prosecutors' misperceptions 
about the gravity of the crime, criminal actions are rarely initiated 
against counterfeiters. As for private enforcement actions, trademark 
and copyright owners are consistently frustrated by an inability to 
recover any meaningful damages.
  The Anticounterfeiting Consumer Protection Act of 1995 will help law 
enforcement officials contend with the sophisticated nature of modern 
counterfeiting. First, it increases criminal penalties by making 
trafficking in counterfeit goods or services a RICO offense, 
consequently providing for increased jail time, criminal fines, and 
asset forfeiture.
  Second, the legislation allows greater involvement by all levels of 
Federal law enforcement in fighting counterfeiting, including enhanced 
authority to seize counterfeit goods and the tools of the 
counterfeiters' trade.
  Third, it makes it more difficult for these goods to re-enter the 
stream of commerce once they have been seized.
  Fourth, our bill also adds teeth to existing statutes and provides 
stronger civil remedies, including civil fines pegged to the value of 
genuine goods and statutory damage awards of up to $1,000,000 per mark.
  The Anticounterfeiting Consumer Protection Act of 1995 will provide 
law enforcement officials with the tools they need to fight back, and 
to protect American business and the health and safety of American 
consumers. The time has come to make sure that our fight against 
counterfeiting is as sophisticated and modern as the crime itself.

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